Govt to seek CCI's nod for Lakhra plant privatisation

06 February, 2014

ISLAMABAD: The federal government has decided to push the case of Lakhra Power Plant's privatisation and called a meeting of the Council of Common Interests (CCI) next week to seek the nod of provinces.

ISLAMABAD: The federal government has decided to push the case of Lakhra Power Plant's privatisation and called a meeting of the Council of Common Interests (CCI) next week to seek the nod of provinces.

The CCI, headed by Prime Minister Nawaz Sharif with all provincial chief ministers as members, is expected to meet on Monday next week to consider a proposal to privatise the 150-megawatt coal-based Lakhra Power Plant, according to officials of the Ministry of Finance and Privatisation Commission.

Usually, the entities cleared by the CCI are placed on the privatisation list. However, while bypassing the procedure, the Cabinet Committee on Privatisation (CCOP) had in October last year decided to add the plant to the list of 32 enterprises that the government wanted to privatise under an agreement with the International Monetary Fund. The CCOP had cleared the plant subject to approval of the CCI.

In order to seek the next important endorsement, the government has also decided to call a meeting of the Privatisation Commission (PC) board soon after the CCI meeting, according to officials.

The prime minister has appointed Zafar Iqbal, a chartered accountant and nominated by Finance Minister Ishaq Dar, as the sixth member of the PC board. Earlier, the board became dysfunctional after the resignation of Munir Kamal.

The board is expected to allow the government to hire consultants for privatising the plant.

Former military ruler General (Retired) Pervez Musharraf's government had given Lakhra Power Plant on a 20-year lease to the Associated Group of Iqbal Z Ahmad. However, in August last year the Supreme Court of Pakistan struck down the lease agreement.

The court declared the lease illegal and void and directed the federal government to conduct an inquiry to fix civil and criminal liabilities on the beneficiaries in accordance with the law.

According to the court's judgment, the lease agreement between the Associated Group and Wapda was not sustainable because of being non-transparent and also suffered from irregularities, illegalities, omissions and commissions as well as violated relevant rules and precedents set forth by superior courts.

At present, the power plant requires complete rehabilitation as its dependable capacity is said to have dropped to 30MW.

Federal adjuster

The Ministry of Finance has decided to push again the case of activating the office of federal adjuster to collect electricity dues of provinces at source. Ministry officials want to take the matter to the CCI again.

But, according to officials of the Ministry of Inter-Provincial Coordination, in the July 2013 meeting the CCI had opposed the appointment of a federal adjuster after the provinces refused to allow the federal government to deduct electricity arrears from their share in federal taxes.

Sindh government, the main defaulter, was unwilling to allow the federal adjuster to deduct receivables at source on a plea that due to a huge number of illegal connections, the provincial government was not in a position to identify the exact quantum of outstanding liabilities unless such illegal connections were cut off.

After clearing Rs480 billion last year, the circular debt has again piled up, primarily because of delay in payment of bills and inability of authorities to stop electricity theft.